March 30th, 2009 [ Comments ]

CD vs. Savings Account

If the economic crisis has taught us anything, it is the fact that it is unrealistic to expect the same yields we had in previous yields. Basically, expectations have to be lowered and the worst should be expected. Take the example of 401(k) plans. Previously, these investments were earning around 10% a year. Now, investors would be lucky if they don’t lose money. In the same way, investors also need to lower their expectations for certificates of deposit (CD) and savings accounts. On March 30th 2009, the average interest rate for 12 months CDs was pegged at 1.76%. This is a far cry from its peak in 2007.

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